Vertical foreclosure and multi-segment competition

Bruno Jullien, Markus Reisinger and Patrick Rey

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Abstract: This paper analyzes a supplier's incentives to foreclose downstream entry when entrants have stronger positions in different market segments, thus bringing added value as well as competition. We first consider the case where wholesale contracts take the form of linear tariffs, and characterize the conditions under which the competition-intensifying effect dominates, thereby leading to foreclosure. We then show that foreclosure can still occur with non-linear tariffs, even coupled with additional provisions such as resale price maintenance.

Keywords: Foreclosure; Vertical Contracting; Customer Segments; Downstream Competition (search for similar items in EconPapers)
Date: 2018-08
Note: View the original document on HAL open archive server: https://hal.science/hal-03263466v1
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Citations: View citations in EconPapers (2)

Published in Economics Letters, 2018, 169, pp.31-34. ⟨10.1016/j.econlet.2018.04.023⟩

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Related works:
Journal Article: Vertical foreclosure and multi-segment competition (2018)
Working Paper: Vertical Foreclosure and Multi-Segment Competition (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03263466

DOI: 10.1016/j.econlet.2018.04.023

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